National Market System (NMS)
Refers to over-the-counter trading. System of trading OTC
stocks under the sponsorship of the NASD.
Must meet certain criteria for size, profitability and trading activity. More
comprehensive information is available for NMS stocks than for non-NMS stocks
traded OTC (high, low, and last-sale prices,
cumulative volume figures, and bid and ask
quotations throughout the day). This is due to the fact that market
makers must report the actual price and number of shares
in each transaction within 90 seconds verses nonreal-time reporting for non-NMS
stocks (thus, last sale prices and minute-to-minute volume updates are not
possible).

Negative convexity
A bond characteristic such that the price appreciation will be less than the price depreciation for a large change in yield of a given number of basis points. For example, a fixed-rate mortgage may lose value as rates go down because of prepayments.

Negotiable Order of Withdrawal Account (NOW)
An interest-earning account on which chechs may be drawn. Withdrawals from NOW accounts may be offered by commerical banks, mutual savings banks, and savings and loan associations and may be owned only by individuals and certain nonprofit organizations and govermental units.

Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing the purchase of an asset and the asset's cash yield. Positive carry means that the yield earned is greater than the financing cost; negative carry means that the financing cost exceeds the yield earned.

Net lease
A lease arrangement under which the lessee is responsible for all property taxes, maintenance expenses, insurance, and other costs associated with keeping the asset in good working condition.

Net parity
Antithesis of gross parity.
Convertibles: Price of a convertible security including accrued interest.
International: Price of international security including commissions, fees, stamp duty, and other transaction costs, translated into U.S. dollar amounts.

Net period
The period of time between the end of the discount period and the date payment is due.

Net position
The value of the position subtracting the initial cost of setting up the position. For example, if 100 options where purchased for $1 each and the option is currently trading for $9, the value of the net position is $900 - $100 = $800.

neutral
Describing an opinion that is neither bearish not bullish. Neutral option strategies are generally designed to perform best if there is little or no net change in the price of the underlying stock or index. See also Bearish and Bullish.

Neutral hedgeHedge that is expected to yield a dollar-neutral result of the combined position, regardless of price change in any part of the hedge securities. For any convertible trading at a premium, this ratio is less than 100%. The higher the convertible premium, the lower a ratio must be to be neutral. See: Delta.

Neural Nets
Models which mimic the massive parallel processing that occurs in the brain.

Neutral period
In the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not start or end on either a Friday or the day before a holiday.

NYSE composite index
Composite index covering price movements of all new world common stocks listed on the New York Stock Exchange. It is based on the close of the market on December 31, 1965, at a level of 50.00, and is weighted according to the number of shares listed for each issue. Print changes in the index are converted to dollars and cents so as to provide a meaningful measure of changes in the average price of listed stocks. The composite index is supplemented by separate indexes for four industry groups: industrial, transportation, utility, and finance.

"News out"
Refers to over-the-counter trading. A news story concerning the stock being considered has recently been posted on one of the news services, such as the Dow Jones News Service or Reuters. A courtesy standard in trading is to mention that "news is out," in case the other party is unaware of the new development.

Nikkei stock average
Applies mainly to international equities. Price-weighted average of 225 stocks
of the first section of the Tokyo Stock Exchange started on May 16, 1949.
Japanese equivalent of the US Dow.

No Adjournment
Within the text on the proxy, card are the words: "Shares will be voted at this annual meeting or at any adjournment thereof." If a securityholder strikes out this phrase, the proxy cannot be counted at any adjournment (reconvening) of the meeting.

"No Autex"
Used in the context of general equities. "No buy or sell interest should be entered into the Autex (advertising) system." Inquirers do not want exposure of an inquiry to affect the price at which they hope to ultimately transact the trade, hence disturbing the customer's picture.

Noah Effect
The tendency of persistent time series (0.50<H<1.00) to have abrupt, and discontinuous changes. The normal distribution assumes continuous changes in a system. However, a time series which exhibits Hurst statistics may abruptly change levels, skipping values either up or down. Mandelbrot coined the term "Noah effect" after the biblical story of the deluge. See: Joseph Effect, Hurst Exponent, Persistence, Anti-persistence.

NOB spread
Notes over bonds spread. This is the difference in yield between Treasury notes (maturing in 2 to 10 years) and Treasury bonds (maturing in 15 or more years), which is traded using Treasury note and bond futures.

No Substitution
Within the text on a proxy card are the words:
"The shareholder appoints certain people (collectively, the proxy committee) with full power of substitution to vote the shares." If the security holder strikes out this phrase, the proxy cannot be voted if there is a change in the designated proxy committee.

Nominal quotation
Used in the context of general equities. Bid and offer prices given by a market maker for the purpose of valuation, not as an invitation to trade; must be specifically identified as such by prefixing the quotes FYI (for your information) or FVO (for valuation only).

Non-Discretionary Proposal
A proposition on a proxy card requiring a response
from the beneficial owner which does not fall under the Ten Day Rule. Therefore, the broker cannot vote on behalf of the beneficial owner, it can only vote after specific instructions have been received from the beneficial owner.

Nonmember bank
Depository institution that is not a member of the Federal Reserve System. Specifically, a state-chartered commercial bank that has elected not to join the System.

Nonmember firm
Used for listed equity securities. Brokerage firm that is not a member of an organized exchange (NYSE). Such firms executetrades either through member firms, or on regional exchanges where they are members, or in the third market.

Normal Distribution
The well known bell shaped curve. According to the Central Limit Theorem, the probability density function of a large number of independent, identically distributed random numbers will approach the normal distribution. In the fractal family of distributions, the normal distribution only exists when alpha equals 2, or the Hurst exponent equals 0.50. Thus, the normal distribution is a special case which in time series analysis is quite rare. See: Alpha, Central Limit Theorem, Fractal Distribution.

Normalizing method
Making a change in the income account equivalent to the tax savings realized through the use of different depreciation methods for shareholder and income tax purposes, thus washing out the benefits of the tax savings reported as final net income to shareholders.

Not held order (NH order)
Applies mainly to international equities. Market or limit order in which the customer does not desire to transact automatically at the inside market (market held) but instead has given the trader or floor broker (listed stock) time and price discretion in transacting on a best-efforts basis. This will not hold the broker responsible for missing the price within the limits (limit not held) or obtaining a worse price (market not held). The order is marked "not held, disregard tape/DRT, take time" or bears any such qualifying notation, excluding "or better." See: Held order.